Kuwait is a major oil exporter and a founding member of OPEC. Strategically positioned on the Persian Gulf, it also plays an important geopolitical role in the Middle East. The United States maintains a significant military presence in the country and uses it as a hub for projecting power throughout the region.
Kuwait is the 10th-largest producer of petroleum and other liquids in the world, accounting for roughly 2.8 million barrels per day in 2013. With an estimated 102 billion barrels of proven reserves – about 6% of the global total – Kuwait also boasts the sixth-largest oil reserves worldwide. It maintains an additional 2.5 billion barrels of reserves in the Partitioned Neutral Zone it shares with Saudi Arabia.
Kuwait is also one of the founding members of OPEC, and it stands as the bloc’s third-largest producer and fifth-largest exporter of crude oil and condensates. As one of the few OPEC states with spare production capacity, Kuwait has ramped up its oil output in recent years in response to falling Libyan production amid the country’s ongoing civil war. The majority of Kuwait’s crude exports go to Asian markets, particularly South Korea, India, and China.
The Kuwaiti government relies heavily on oil revenues for its annual income. Petroleum exports account for nearly 60% of the country’s GDP and 94% of its export revenues, exposing it to volatility in global oil prices. However, Kuwait maintains one of the largest sovereign wealth funds in the world, the Kuwait Investment Authority, which shields it from short-term dips in prices.
Kuwait is a strategic partner for the United States, particularly given its location on the Persian Gulf and along Iraq’s southern border. It served as the main platform for U.S. and coalition operations in the Iraq War and played a key role in the U.S. withdrawal. The United States and Kuwait also cooperate in counterterrorism and intelligence-sharing efforts.
Many believe that the United States’ growing domestic oil production will reduce Washington’s energy dependence on Middle Eastern oil, and consequently, its level of involvement in the region. If this were true, we might expect to see Kuwait’s relationship with the United States diminish as U.S. oil production rises and energy imports from Kuwait drop, particularly since mineral fuels and oil make up the largest segment of Kuwaiti exports to the United States.
However, there is little evidence to suggest that energy trade patterns carry the special weight in diplomatic and security relationships that people often assume. The United States and Kuwait share other interests such as preventing regional instability, terrorism and sectarian violence, and the two countries’ diplomatic relationship has been cemented by the Gulf War, in which the United States led the effort to restore Kuwait’s independence. These factors suggest continuing strong diplomatic and security relations, regardless of the level of bilateral oil trade between the United States and Kuwait.